China Tariffs Will Not Affect Theft of U.S. Intellectual Property Theft (Part 1 of 3)

This administration is persistent in portraying China as the primary – lead bad actor…in U.S.’s trade imbalance and then rationalize the imposition of tariffs based on the vagaries of China’s theft of (U.S. company’s) intellectual property. I discourage readers from assuming this is a simple problem that has been suddenly thrust upon U.S. companies, nor is it a problem which only this administration has raised alarms and endeavored to mitigate. https://kpstrat.com/wp-admin/post.php?post=227

Let’s be clear, the theft, misappropriation, and/or infringement of one another’s ideas…however one wishes to characterize it as a principle of law, whether those ideas have been registered as intellectual property with a government entity, or, alternatively, held as proprietary. Little new here. Why else would the framers of the U.S. Constitution specifically incorporate ‘intellectual property’ in Article I, Section 8. Infringement – misappropriation of ideas, was occurring long before the U.S. Constitution was ratified in 1789, and unfortunately still occurs today, with speed, value, and ramifications to the loss of people’s or corporation’s ideas all being relative.

It’s important for holders of IP (intellectual property) to recognize that…patents particularly, are subsets of intangible assets embedded with intellectual, structural, relationship, and competitive capital and underlie – are the foundations to all IP.

I, and numerous others, have consistently counseled companies…myself, since the early 1990’s, about the long term, often irreversible, adverse (economic, competitive advantage) effects when IP – valuable intangible assets are compromised. For me, work in this arena began as an academic (investigative) researcher and now as an intangible asset (business transaction) strategist and risk specialist, i.e., whenever, wherever, however intangible assets are in play. https://kpstrat.com/wp-admin/post.php?post=4430

As for the imposition of tariff’s by this administration, such actions may lead to various outcomes…

• a short burst of public attention to what is largely a business issue, but politicized as an American ‘job theft’ problem,

• demands for more aggressive actions-tariffs as costly intangible asset (IP) compromises are not determined to be measurably reduced,

• punishing – sanctioning only the flagrant and sloppy (unsophisticated) offenders ‘caught with their hands, literally, in the cookie jar’.

Yes, the convenient target country for this administration in terms of trade imbalance and IP theft, is China…and just as conveniently omits ,or not be versed in the countless other ‘bad actors’, i.e., some of whom are state sponsored, others, independent information brokers of business intelligence, along with rising numbers of legacy free players, all of whom, highly lucrative mission lies in compromising – acquiring – exploiting IP and intangible assets belonging to others. So, to cast this time immemorial problem in a political context to stir the emotions of a political base is, at best disingenuous and probably hollow.

There is 30+ years of objective and anecdotal evidence for doing precisely what’s being alleged here…of course, it’s not surprising, this administration’s, boisterous, politicized, and simplistic tariff-based actions and threats are characterized as the prelude to mitigating (arresting) the IP – proprietary intangible asset compromise problem. Of course, doing so, has sparked a bevy of in-kind responses from the Chinese government, i.e., placing tariffs on specific (politically sensitive) U.S. produced-manufactured goods.

But, if this administration assumes economic sanctions-tariff’s, standing alone…will somehow miraculously serve as deterrents, I urge no company, who may already be engaged in, or, contemplating doing business in China, and numerous other countries, to hold their transactional breadth!

Let’s be clear, the compromise of another’s ideas…however one wishes to characterize – politicize it, and whether those ideas are registered-issued as intellectual property with a government entity, or, alternatively, held as proprietary (trade secrets), there is little new here. Why else would the framers of the U.S. Constitution specifically incorporate ‘intellectual property’ in Article I, Section 8! Infringement – misappropriation of ideas, was occurring long before the U.S. Constitution was ratified in 1789, and unfortunately still occurs today, with means and speed of a compromise, value of the assets, and ramifications of the loss all being relative.

The U.S. prudently seeks changes in terms of…

how China’s trade laws are structured and enforced relative to incoming IP.

being more aligned with principles-precedents of WIPO (World Intellectual Property Organization) and WTO (World Trade Organization).

China’s dynastic and multi-layered business culture which has long viewed the acquisition and use of ‘others knowledge’ as acceptable and complimentary to the originator.

And, to add unhelpful complexity to negotiating a potentially acceptable agreement – resolution…this administration appears to be defining the problem and characterizing its scope largely through the lens of a single individual who may or may not have sufficient operational clarity with its asymmetric components, complexities, nor the quantities of ultra-sophisticated, aggressively predatorial, and global (legacy free) players, who also, seek, broker, and otherwise trade in proprietary information, trade secrets, and intellectual properties, ala intangible assets.

Michael D. Moberly – originally published April 5, 2018 – restructured and re-published on September 26, 2018 – St. Louis – m.moberly@kpstrat.com ‘The Business Intangible Asset Blog’ (since May 2006) where attention span, business realities, and solutions meet!

Readers are invited to examine other relevant resources I have produced along with the book I authored titled ‘Safeguarding Intangible Assets’ athttps://kpstrat.com/books/